MBS Day Ahead: How Low Can We Go?
Posted To: MBS Commentary
The day begins with the December rally gathering steam, or at least maintaining the surprisingly strong levels achieved yesterday afternoon. Yields continue pushing back into the high 2% territory that they blew through on the way up back in September. How far could this thing run without help from economic data--chiefly, Friday's NFP? At the moment, the rally is already pushing against the bottom of its trend channel, as seen below. There's no rule that says it cannot break below that yellow line and rally at an even faster pace, but with important data coming up, that seems less probable than adherence to the trend channel (the parallel yellow lines). In that case, we can be on the lookout for a day of weakness fairly soon, even if the positive trend continues. Whenever we see a bounce...(
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